Li Ka-Shing’s CK Asset Posts 30.8% Profit Jump in ‘Challenging’ First Half of 2021

CK Asset Holdings, the listed developer controlled by Hong Kong’s richest man, Li Ka-shing, reported strong earnings growth for the first half of 2021, with profit attributable to shareholders leaping 30.8 percent compared with the COVID-hit year-earlier period to reach HK$8.36 billion (now $1.07 billion).

Despite the profit rebound, Hong Kong’s second-largest developer by market capitalisation said in a Thursday filing with the stock exchange that revenue from property sales recognised in the six-month period fell 24 percent year-on-year to HK$14.8 billion as new variants and outbreaks prolonged its pandemic pain.

In releasing its unaudited statements, the group noted that it recorded a lower contribution from Hong Kong property sales in the first half relative to the same period last year because the contracted sales of various projects had not yet been recognised.

In a business review, chairman Victor Li credited “determination and quick adaptation to the rapidly changing business environment” for the profit surge as the developer “maintained stable operation and achieved steady development”.

Hong Kong Sentiment Improves

The Hong Kong property market in the first half was supported by improved purchase sentiment driven by solid demand, low interest rates and the easing local COVID situation, CK Asset said.

Recognised revenue from property sales stemmed mainly from moving remaining residential units of completed projects in Hong Kong and from various projects in mainland China, including the Laguna Verona in Dongguan, Noble Hills in Guangzhou, Upper West Shanghai and Regency Garden in Shanghai.

Rental revenue from the group’s investment portfolio, which includes the Cheung Kong Center and Hutchison House in Hong Kong’s Central district, dipped nearly 3 percent year-on-year during the period to HK$3.35 billion. The group said that rental returns from its properties, which also include the Westgate Mall complex on Shanghai’s West Nanjing Road and the Upper West project in the city’s Putuo district, were hurt by weak leasing momentum as the pandemic continued to dampen the confidence of business and consumers.

CK Asset declared an interim dividend for 2021 of HK$0.41 per share, up 20.6 percent from a year earlier, to be paid in mid-September. The ratio of net debt to net total capital as of 30 June was 11.8 percent, and the group reported ample cash on hand and available banking facilities to satisfy commitments and working capital requirements.

Cross-Border Gloom

CK Asset, which has broadened its horizons in recent years to invest in European properties, including its £4.6 billion (now $6.4 billion) acquisition of UK pub group Greene King in 2019, gave a tepid outlook on the global scene, coloured by the lingering impact of COVID-19.

“Economic recovery is uneven across countries,” the company said. “Whether any rebound is sustainable depends on the fundamentals of each economy. Prospect of global growth in the second half of 2021 will largely be shaped by the path of the pandemic, vaccine access and the extent of policy support.”

In June, CK Asset was reported to be considering the sale of 5 Broadgate, a London office complex acquired for £1 billion in 2018, at a price said to be no less than what it paid to purchase the six-year-old property.

The developer appeared more sanguine about its home city, adding that it expects the Hong Kong property market to remain stable over the medium and long terms, underpinned by solid end-user demand and the prospect of increased economic activity when borders reopen.